GAO: Feds ignoring Clinger-Cohen rules

By Brad Bass

Mar 22, 1998

The General Accounting Office and the Defense Department's inspector general told Congress last week that agencies have been violating the spirit of the Clinger-Cohen Act by using multiple-award task order contracts to circumvent competition and channel business to favored vendors.

"Based on our ongoing work, agencies have not been consistent in achieving competition for orders," said Louis Rodrigues, director of Defense acquisition issues at GAO's National Security and International Affairs Division. Testifying last week before the Senate Armed Services Subcommittee on Acquisition and Technology, Rodrigues said administering agencies routinely misuse multiple-award contracts to circumvent competition.

DOD IG Eleanor Hill said she had turned up evidence of similar problems within DOD. "We have identified use of large single-award contracts with broad statements of work and no competition for individual task orders," Hill said.

A GAO official who requested anonymity said the agency's research so far has revealed problems with the Transportation Department's $1.3 billion Information Technology Omnibus Procurement (ITOP), the National Institutes of Health's Chief Information Officer Solutions and Partners (CIO-SP) and DOD's $3 billion Defense Enterprise Integration Services II (DEIS II) contracts.

Specifically, GAO found that 64 percent of ITOP orders were awarded on a sole-source basis, the source said. He said the practice within the CIO-SP and DEIS II contracts of specifically inviting "recommended" firms to submit proposals for task orders has resulted in only one proposal submitted for most orders.

Rich Lieber, principal of task acquisition services at DOT, said the ITOP program does "emphasize competition" and requires vendors to compete for all large task orders. He said the contract requires procurement officials to direct

$3 million each to small and disadvantaged ITOP contractors and, in the name of fairness, to all the other ITOP vendors as well.

He said once the vendors reach their $3 million threshold, the percentage of business directed to specific contractors will decrease. "The more orders we place, the more we will [award] competitive," Lieber said.

Hill said her investigation revealed that users of one of DOD's multiple-award contracts were "allowed to pick the desired contractor among the multiple-award contracts and direct work to that contractor without competing the requirements."

"On another multiple-award task order contract, contracting officials competed the orders but manipulated evaluations to select the preferred source, which was often the incumbent contractor," Hill said.

The issue of task order competition has been a concern to Sen. Carl Levin (D-Mich.), ranking minority member of the Senate Armed Services Committee, and John Glenn (D-Ohio), ranking minority member of the Senate Governmental Affairs Committee. Both requested the GAO review in December 1996. The GAO source said he expects the final report to come out in June.

A member of Levin's staff said the senator is waiting for GAO's final report and recommendations as well as the results of additional research by the DOD IG before deciding whether to act to correct the problems. "The leading concern is that the premise behind [the Clinger-Cohen Act] was to require agencies to compete these task orders," the staff member said. "The reports we are hearing indicate that this is anything but the case. So this is something we need to look at."

Another concern expressed in Rodrigues' testimony was the disparate nature of the surcharges that contracting officials charge agencies to use their multiple-award contracts.

The GAO source said the CIO-SP program charged customers fees ranging from $125 to $99,000 without any explanation for the differences in the charges. "Their fee structure is more closely tied to the value of the [task orders] rather than the cost of the services that NIH provided, which is what they are supposed to be charging for," the source said. "They might be doing something more when they charge more, but it's not clear what would warrant that big of a gap."

NIH officials did not respond to our requests for comment by press time.